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Trump eyes capital gains tax change

August 11, 2018


by Timothy D. Carkin
Senior Vice President
Ferguson Wellman Capitol Management

News broke that the Trump administration would consider bypassing congressional legislation to change the capital gains taxes rules to index for inflation. The current strategy that is being floated is to use the Treasury department and IRS rather than traditional legislation to redefine capital gains to include only returns in excess of inflation.

The impact of these changes could be substantial for many investors. For example, 10 years ago an investor purchased $10,000 of a stock and, at present, that stock is worth $12,000. If the stock was to be sold now, the taxable capital gain would be $2,000. If, during that period, inflation was 2 percent the proposed rule would only tax the capital gains in excess of that inflation value, thereby lessening tax liability. Some estimates say this would effectively reduce capital gains by 8-25 percent and encourage holders of appreciated assets to consider selling. We continue to monitor this proposal as it unfolds and consider the implications for our clients and their portfolios.

An Apple a Day

This week a myriad of catalysts helped move the markets. Equity markets, still reeling from disappointing reports from marquee technology sector companies such as Facebook, Netflix, Intel and Twitter, looked to their white knight, Apple, to turn the news in their favor. Apple did not disappoint with its largest revenue ever stemming from robust iPhone sales and record app-store sales. On Thursday Apple became all investors could talk about as the company breached a $1 trillion market capitalization. The title of largest publicly traded company has been Apple’s for seven years, a title held by General Electric for 11, but achieving a $1 trillion market cap is a first for any company.

  
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Robert Clark August 11, 2018

This move seems to take power from Congress, and give it to the President. I should think someone would challenge this in the courts.

The move could really benefit me and other long term investors; but overall balance of power seems to be in play more and more.

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